Despite the RBA receiving more use-case proposals for the eAUD than it expected, it warns the issuance of an Australian central bank digital currency could see Aussies forgo banks and lead to bank runs.
A Central Bank Digital Currency pilot program in Australia has received more than 140 use case proposals from the finance industry, but the Reserve Bank of Australia warns that it could displace the Australian dollar and result in people avoiding commercial banks entirely.on Dec. 8 to be given by Assistant Governor Brad Jones at a central bank conference held from Dec. 8 to Dec. 9 local time, in which Jones speaks at length about what effect a CBDC could have on the Australian economy.
The team working on the pilot “eAUD” program is working out which of the proposed use-cases to take into its pilot phase early next year, and is expecting to publish a report on the project around the middle of 2023. For example, with deposits of Australian residents such as savings accounts now making up over 60% of total funding for their banks, enough Australians choosing a CBDC over the Australian dollar could result in banks not having sufficient capital to lend to consumers, which in turn would make it harder for the RBA to transmit monetary policy, he said.
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